hero moto cop
TRANSCRIPT
Hero Moto Corp Ltd
Company
Hero MotoCorp Ltd. (Formerly Hero Honda Motors Ltd.) is the world's largest manufacturer of
two - wheelers, based in India. In 2001, the company achieved the coveted position of being the
largest two-wheeler manufacturing company in India and also, the 'World No.1' two-wheeler
company in terms of unit volume sales in a calendar year. Hero MotoCorp Ltd. continues to
maintain this position till date.
Vision
The story of Hero Honda began with a simple vision - the vision of a mobile and an empowered
India, powered by its bikes. Hero MotoCorp Ltd., company's new identity, reflects its
commitment towards providing world class mobility solutions with renewed focus on expanding
company's footprint in the global arena.
Mission
Hero MotoCorp's mission is to become a global enterprise fulfilling its customers' needs and
aspirations for mobility, setting benchmarks in technology, styling and quality so that it converts
its customers into its brand advocates. The company will provide an engaging environment for
its people to perform to their true potential. It will continue its focus on value creation and
enduring relationships with its partners.
Strategy
Hero MotoCorp's key strategies are to build a robust product portfolio across categories, explore
growth opportunities globally, continuously improve its operational efficiency, aggressively
expand its reach to customers, continue to invest in brand building activities and ensure customer
and shareholder delight.
Manufacturing
Hero MotoCorp two wheelers are manufactured across three globally benchmarked
manufacturing facilities. Two of these are based at Gurgaon and Dharuhera which are located in
the state of Haryana in northern India. The third and the latest manufacturing plant is based at
Haridwar, in the hill state of Uttrakhand.
Technology
In the 1980's the Company pioneered the introduction of fuel-efficient, environment friendly
four-stroke motorcycles in the country. It became the first company to launch the Fuel Injection
(FI) technology in Indian motorcycles, with the launch of the Glamour FI in June 2006.
Its plants use world class equipment and processes and have become a benchmark in leanness
and productivity.
Hero MotoCorp, in its endeavor to remain a pioneer in technology, will continue to innovate and
develop cutting edge products and processes
Products
Hero MotoCorp offers wide range of two wheeler products that include motorcycles and scooters, and has set the industry standards across all the market segments.
Distribution
The Company's growth in the two wheeler market in India is the result of an intrinsic ability to increase reach in new geographies and growth markets. Hero MotoCorp's extensive sales and service network now spans over to 5000 customer touch points. These comprise a mix of authorized dealerships, service & spare parts outlets, and dealer-appointed outlets across the country.
Brand
The new Hero is rising and is poised to shine on the global arena. Company's new identity "Hero MotoCorp Ltd." is truly reflective of its vision to strengthen focus on mobility and technology and creating global footprint. Building and promoting new brand identity will be central to all its initiatives, utilizing every opportunity and leveraging its strong presence across sports, entertainment and ground- level activation.
Brand Hero
It's a story about transformation. A company that kept growing stronger through its innovations & quality. An enterprise driven by a burning passion to provide the nation with fuel efficient, comfortable and eco friendly two wheelers.
TOP MANAGEMENT
Dr. Brijmohan Lall Munjal
"Don't dream if you can't fulfill your dreams'' Brijmohan Lall Munjal is often fond of saying. The founder and patriarch of the $3.2 billion Hero Group is your classic first generation entrepreneur. He is a man who started small, dreamt big and used a combination of grit and perseverance to create one of the country's largest corporate groups and the World's No.1 Two Wheeler Company.
Instinctive from a young age, Brijmohan Lall made a rather unusual start in life. Around the time
when the freedom movement in India was taking shape in the late 1920s, he walked into a newly
opened Gurukul (Indian heritage school) near his home in Kamalia (now in Pakistan). He was
only six years old then.
Thus began an extraordinary tale of courage and perseverance. Brijmohan began his business
story after partition in 1947, when he and his brothers relocated to Ludhiana. The family set up a
company that provided poor people with basic transport (cycles). Three decades later, as India
evolved, he added a second crucial chapter - which visualized affordable and technologically
superior transport to millions of middle class Indians. The rest is history.
Building Relationships
When Brijmohan and his brothers started out, there was no concept of organized dealer
networks. Companies just produced, and most dealers functioned like traders. Brijmohan
changed the rules of the business by trusting his gut instincts; introducing business norms that
were ahead of their time, and by investing in strategic relationships. Brijmohan built a series of
bonds and networks with hundreds of family members, vendors, dealers and employees. Much
like the Japanese keiretsu system, these networks are now the glue that holds the Hero Group
together.
"Thanks to the relationships that we have nurtured so passionately in the Hero Family, the
younger generations of some of our bicycle dealers have become dealers of Hero MotoCorp.
These relationships have survived through generations - through bad times and good times'' the
patriarch now reminiscences.
Besides bonding with his vendors and dealers, Brijmohan has been personally responsible for
kindling a spirit of entrepreneurship amongst his employees, and today, 40 of his former
employees are successful entrepreneurs.
Staying Ahead
Though not technically qualified in the conventional sense, few of his contemporaries have
understood the dynamics of technology better than Brijmohan Lall has. He could always
visualize the applicability of technology before others could. For example, in the 1980s, when all
two-wheeler companies in India opted for two-stroke engine technology, Brijmohan preferred a
four-stroke engine - a technology that dramatically increased fuel efficiency and reduced
maintenance costs. This technology was one of the biggest reasons for Hero MotoCorp's
stupendous success.
A Corporate Citizen
A frugal upbringing and a value system modeled on the famous Gurukul system - which stresses
the sanctity of the teacher-pupil relationship - imbibed in Brijmohan a strong sense of social
commitment and responsibility.
There is a special place in his heart for Ludhiana, the city where he took roots. Today, Ludhiana
is a modern, bustling city, but Brijmohan has played no mean role in its evolution. Several
schools and educational institutions in Ludhiana owe their existence to the Munjal family.
The Ludhiana Stock Exchange owes its existence to Brijmohan's vision as does the Ludhiana
Flying Club. He's also set up the not-for-profit Dayanand Medical College and Hospital-an
institute now rated as one of the best medical colleges in India, in terms of infrastructure, quality
of staff and alumni profile.
In and around Dharuhera, near the first Hero MotoCorp plant, Brijmohan and his family have left
their stamp of philanthropy. The Raman Kant Munjal Foundation - which Brijmohan set up in
memory of his eldest son, today runs a higher secondary school and a very modern and well-
equipped 100-bed hospital at Dharuhera. The group has also adopted numerous villages and
provides education, vocational training, drinking water, roads, streetlights and sewerage.
Dr. Brijmohan Lall Munjal
Chairman
MILESTONES
1983
Joint Collaboration Agreement with Honda Motor Co. Ltd. Japan signed
Shareholders Agreement signed
1984
Hero Honda Motors Ltd. incorporated
1985
First motorcycle "CD 100" rolled out
1987
100,000th motorcycle produced
1989
New motorcycle model - "Sleek" introduced
1991
New motorcycle model - "CD 100 SS" introduced
500,000th motorcycle produced
1992
Raman Munjal Vidya Mandir inaugurated - A School in the memory of founder Managing
Director, Mr. Raman Kant Munjal
1994
New motorcycle model - "Splendor" introduced
1,000,000th motorcycle produced
1997
New motorcycle model - "Street" introduced
Hero Honda's 2nd manufacturing plant at Gurgaon inaugurated
1998
2,000,000th motorcycle produced
1999
New motorcycle model - "CBZ" introduced
Environment Management System of Dharuhera Plant certified with ISO-14001 by DNV
Holland
Raman Munjal Memorial Hospital inaugurated - A Hospital in the memory of founder Managing
Director, Mr. Raman Kant Munjal
2000
4,000,000th motorcycle produced
Environment Management System of Gurgaon Plant certified ISO-14001 by DNV Holland
Splendor declared 'World No. 1' - largest selling single two-wheeler model
"Hero Honda Passport Programme" - CRM Programme launched
2001
New motorcycle model - "Passion" introduced
One million productions in one single year
New motorcycle model - "Joy" introduced
5,000,000th motorcycle produced
2002
New motorcycle model - "Dawn" introduced
New motorcycle model - "Ambition" introduced
Appointed Virender Sehwag, Mohammad Kaif, Yuvraj Singh, Harbhajan Singh and Zaheer
Khan as Brand Ambassadors
2003
Becomes the first Indian Company to cross the cumulative 7 million sales mark
Splendor has emerged as the World's largest selling model for the third calendar year in a row
(2000, 2001, 2002)
New motorcycle model - "CD Dawn" introduced
New motorcycle model - "Splendor +" introduced
New motorcycle model - "Passion Plus" introduced
New motorcycle model - "Karizma" introduced
2004
New motorcycle model - "Ambition 135" introduced
Hero Honda became the World No. 1 Company for the third consecutive year.
Crossed sales of over 2 million units in a single year, a global record.
Splendor - World's largest selling motorcycle crossed the 5 million mark
New motorcycle model - "CBZ*" introduced
Joint Technical Agreement renewed
Total sales crossed a record of 10 million motorcycles
2005
Hero Honda is the World No. 1 for the 4th year in a row
New motorcycle model - "Super Splendor" introduced
New motorcycle model - "CD Deluxe" introduced
New motorcycle model - "Glamour" introduced
New motorcycle model - "Achiever" introduced
First Scooter model from Hero Honda - "Pleasure" introduced
2006
Hero Honda is the World No. 1 for the 5th year in a row
15 million production milestone achieved
2006
Hero Honda is the World No. 1 for the 5th year in a row
15 million production milestone achieved
2007
Hero Honda is the World No. 1 for the 6th year in a row
New 'Splendor NXG' launched
New 'CD Deluxe' launched
New 'Passion Plus' launched
New motorcycle model 'Hunk' launched
20 million production milestone achieved
2008
Hero Honda Haridwar Plant inauguration
New 'Pleasure' launched
Splendor NXG lauched with power start feature
New motorcycle model 'Passion Pro' launched
New 'CBZ Xtreme' launched
25 million production milestone achieved
CD Deluxe lauched with power start feature
New 'Glamour' launched
New 'Glamour Fi' launched
2009
Hero Honda GoodLife Program launched Hunk' (Limited Edition) launched
Splendor completed 11 million production landmark
New motorcycle model 'Karizma - ZMR' launched
Silver jubilee celebrations
2010
New model Splendor Pro launched
Launch of new Super Splendor and New Hunk
2011
New licensing arrangement signed between Hero and Honda
Launch of new refreshed versions of Glamour, Glamour FI, CBZ Xtreme, Karizma
Crosses the landmark figure of 5 million cumulative sales in a single year
CSR
Hero MotoCorp takes considerable pride in its stakeholder relationships, especially ones developed at the grassroots. The Company believes it has managed to bring an economically and socially backward region in Dharuhera, Haryana, into the national economic mainstream.
An Integrated Rural Development Centre has been set up on 40 acres of land along the Delhi-Jaipur Highway. The Centre-complete with wide approach roads, clean water and education facilities for both adults and children-now nurtures a vibrant, educated and healthy community.
The Foundation has adopted various villages located within vicinity of the Hero MotoCorp factory at Dharuhera for integrated rural development. This includes:
Installation of deep bore hand pumps to provide clean drinking water.
Constructing metalled roads and connecting these villages to the National Highway (NH -8).
Renovating primary school buildings and providing hygienic water and toilet facilities.
Ensuring a proper drainage system at each of these villages to prevent water-logging.
Promoting non-conventional sources of energy by providing a 50 per cent subsidy on biogas
plants.
AWARDS
2011
Two-wheeler Manufacturer of the Year award by Bike India magazine.
Adjudged the "Bike Manufacturer of the Year" at the Economic Times ZigWheels Car and Bike
Awards.
- CNBC Awaaz - Storyboard special commendation for "Effective rebranding of a new
corporate entity" by CNBC Awaaz Consumer Awards
- "Most Recommended Two-Wheeler Brand of the Year" award by CNBC Awaaz
Consumer Awards
- Colloquy Loyalty Awards "Innovation in Loyalty Marketing International 2011" for Hero
GoodLife
- "Best Activity Generating Short or Long-Term Brand Loyalty" by the Promotion
Marketing Award of Asia Order of Merit for Hero GoodLife
- Ranked No 1 brand in the Auto (Two-Wheelers) category in the Brand Equity "Most Trusted
Brand"2011 survey
2010
Rated as Top Indian Company in Automobile - Two Wheelers sector by Dun & Bradstreet -
Rolta Corporate Awards 2009
Most Preferred Brand of Two-Wheelers" award at the CNBC Awaaz Consumer Awards.
Adjudged at top of the two-wheeler category in the Brand Equity Most Trusted Brands 2010
Survey.
Ranked No. 3 Most Trusted Brand across categories amongst Young Adult Males
Company of the Year awarded by Economic Times Awards for Corporate Excellence 2008-09.
CNBC TV18 Overdrive Awards 2010 'Hall of Fame' to Splendor
NDTV Profit Car & Bike Awards 2010
- Two-wheeler Manufacturer of the Year
- CnB Viewers' Choice Two-wheeler of the Year (Karizma ZMR)
- Bike Maker of the Year by ET-ZigWheels Car & Bike of the Year Awards 2009"
2009
'Two-wheeler Manufacturer of the Year' by NDTV Profit Car & Bike Awards 2009 and
Passion Pro adjudged as CNB Viewers' Choice two-wheeler
Top Indian Company under the 'Automobile - Two-wheelers' sector bythe Dun & Bradstreet-
Rolta Corporate Awards
Won Gold in the Reader's Digest Trusted Brand 2009 in the 'Motorcycles' category
NDTV Profit Business Leadership Awards 2009 - two-wheeler category
2008
NDTV Profit Business Leadership Award 2008 - Hero Honda Wins the Coveted "NDTV
Profit Business Leadership Award 2008"
TopGear Design Awards 2008 - Hunk Bike of the Year Award
NDTV Profit Car India & Bike India Awards - NDTV "Viewers' Choice Award" to Hunk in
Bike categoryIndiaTimes Mindscape and Savile Row ( A Forbes Group Venture ) Loyalty
Awards - "Customer and Brand Loyalty Award" in Automobile (two-wheeler) sector
Asian Retail Congress Award for Retail Excellence (Strategies and Solutions of business
innovation and transformation) - Best Customer Loyalty Program in Automobile category
NDTV Profit Car India & Bike India Awards - Bike Manufacturer of the year
Overdrive Magazine - Bike Manufacturer of the year
TNS Voice of the Customer Awards:
No.1 executive motorcycle Splendor NXG
No.1 standard motorcycle CD Deluxe
No. premium motorcycle CBZ Xtreme
2007
The NDTV Profit Car India & Bike India Awards 2007 in the following category:
Overall "Bike of the Year" - CBZ X-treme
"Bike of the Year" - CBZ X-treme (up to 150 cc category)
"Bike Technology of the Year" - Glamout PGM FI
"Auto Tech of the Year" - Glamout PGM FI by Overdrive Magazine.
"Bike of the Year" - CBZ X-treme by Overdrive Magazine.
Ranked CBZ X-treme "Bike of the Year" - by B S Motoring Magazine
"Most Trusted Company", by TNS Voice of the Customer Awards 2006.
CD Deluxe rated as "No 1 standard motorcycle" by TNS Voice of the Customer Awards 2006.
2006
Adjudged 7th Top Indian Company by Wallstreet Journal Asia (Top Indian Two Wheeler
Company).
One of the 8 Indian companies to enter the Forbes top 200 list of world's most reputed
companies.
No. 1 in automobile industry by TNS Corporate Social Responsibility Award.
Best in its class awards for each category by TNS Total Customer Satisfaction Awards
2006:
Splendor Plus (Executive)
CD Deluxe (Entry)
Pleasure (Gearless Scooters)
Splendor & Passion - Top two models in two wheeler category by ET Brand Equity Survey
2006.
Adjudged 7th Top Indian Company by Wallstreet Journal Asia (Top Indian Two Wheeler
Company).
Top Indian company in the Automobile - Two Wheeler sector by Dun & Bradstreet - American
Express Corporate Awards 2006.
Hero Honda Splendor rated as India's most preferred two-wheeler brand at the Awaaz
Consumer Awards 2006.
Certificate of Export Excellence for outstanding export performance during 2003-04 for two-
wheeler & three- wheelers - Complete (Non SSI) by Engineering Export Promotion Council.
The NDTV Profit Car India & Bike India Awards 2006 in the following category:
Bike Maker of the Year
Bike of the Year - Achiever
Bike of the Year - Achiever (up to 150 cc category)
Bike of the Year - Glamour (up to 125 cc category)
NDTV Viewers' Choice Award to Glamour in the bike category
2005
Awaaz Consumer Awards 2005 - India's most preferred two-wheeler brand by CNBC in the
'Automobiles' category.
Bike Maker of the Year Award by Overdrive Magazine.
ICWAI National Award for Excellence (Second) in Cost Management 2004 in the private sector
category by ICWAI.
10th Motilal Oswal Wealth Creator Award for as the most consistent wealth creator for the
period 1991-2005.
2004
Winner of the Review 200 - Asia's Leading Companies Award (3rd Rank amongst the top 10
Indian companies).
GVC Level 1 (Highest Rating) by CRISIL for corporate Governance.
Adjudged as the Best Value Creator - Large Size Companies 2003-04 by The Outlook Money.
Corporate Excellence Award 2004 by Indian Institute of Materials Management.
Adjudged as the Organization with Innovative HR Practices by HT Power Jobs for HR
Excellence.
ICSI National Award for Excellence in Corporate Governance 2004 by The Institute of
Company Secretaries of India.
2003
Winner of the Review 200 - Asia 's Leading Companies Award (3rd Rank amongst the top 10
Indian companies).
Most Respected Company in Automobile Sector by Business World.
Bike Maker of the Year by Overdrive Magazine.
2002
Bike Maker of the Year by Overdrive Magazine.
Winner of the Review 200 - Asia 's Leading Companies Award (4th Rank amongst the top 10
Indian companies).
Company of the Year of ET Awards for Corporate Excellence.
Ranked 4th in 'Overall Best Managed Company' category, ranked 3rd in 'Best Financial
Management' and 'Best Operational Efficiency' category, ranked 6th in 'Overall Best Investor
Relations' category, by Asiamoney.
Highest Wealth Creating Company of the Year Award by the Money.
GVC Level 1 (Highest Rating) by CRISIL for Corporate Governance.
2001
Bike Maker of the Year by Overdrive Magazine.
Winner of the Review 200 - Asia 's Leading Companies Award (9th Rank amongst the top 10
Indian Companies).
Winner of Three Leaves Award for showing Corporate Environment Responsibility in the
Automobile Sector by Centre for Science & Environment.
1999
National Productivity Award for the Best Productivity Award in the category of Automobile &
Tractor presented by Vice President of India.
1995
The Analyst Award 1995 presented to Hero Honda Motors Ltd. on being ranked 9th amongst the
most investor rewarding companies in India.
National Award for outstanding contribution to the Development of Indian Small Scale Industry
(NSIC Award - Presented by President of India).
1991
Economic Times-Harvard Business School Award for Corporate Performance to Hero Honda
Motors Ltd.
KEY POLCIES
A company that believes in maintaining ecological standards along with business standards.
"We must do something for the community from whose land we generate our wealth."
- Chairman Dr.Brijmohan Lall Munjal..
At Hero MotoCorp, our goal isn't limited to business but encompasses the broader spectrum of
serving humanity through social initiatives. Hero MotoCorp takes a stand as a socially
responsible enterprise respectful of its environment.
Hero MotoCorp has been strongly devoted not only to environmental conservation programs but
also expresses the increasingly inseparable balance between economic concerns, environmental
and social issues faced by business. A business must not grow at the expense of mankind but
must serve humankind at large.
ENVIRONMENT POLICY
We at Hero MotoCorp have been committed to demonstrate excellence in our environmental
performance on a continuous basis, as an intrinsic element of our corporate philosophy
To achieve this we commit ourselves to:
Integrate environmental attributes and cleaner production in all our business processes and
practices with specific consideration to substitution of hazardous chemicals and strengthening
the greening of supply chain.
Continue product innovations to improve environmental compatibility.
Comply with all applicable environmental legislation and also controlling our environmental
discharges through the principles of "alara" (as low as reasonably achievable).
Institutionalize resource conservation in the areas of oil, water, electrical energy, paints and
chemicals.
Enhance environmental awareness of our employees and dealers / vendors, while promoting their
involvement in ensuring sound environmental management.
Quality Policy
Excellence in quality is the core value of Hero MotoCorp philosophy. We are committed at all levels to achieve high quality in whatever we do, particularly in our products and services which will meet and exceed customer's growing aspirations through:
Innovation in products, processes and services..
Continuous improvement in our total quality management systems.
Teamwork and responsibility.
SAFETY POLICY
We believe that safe work practices lead to better business performance, motivated workforce
and higher productivity.
We shall create a safety culture in the organization by:
Integrating safety and health matters in all our activities.
Promoting safety and health awareness amongst employees, suppliers and contractors.
Continuous improvements in safety performance through precautions besides participation and
training of employees.
Ensuring compliance with all applicable legislative requirements.
Empowering employees to ensure safety in their respective work places.
SALES PERFORMANCE
FY 04-05 FY 05-06 FY 06-07 FY 07-08 FY 08-09
Total Sales 26,21,400 30,00,751 33,36,756 33,37,142 37,22,000
Exports (incl in above)
64,015 92,666 97,341 90,571 81,193
HERO HONDA REGISTERS 23% GROWTH IN JUNE '06
Records a growth of 21% Sales in Q1 Of 2006-07
New Delhi, July 01, 2006: Hero Honda, the 'World No.1' two-wheeler company, continues to
strengthen its leadership in the Indian two-wheeler industry, registering impressive growth in
sales in the first quarter of the FY 2006 - 07.
For the quarter ending June 2006, the company achieved cumulative sales of 8,32,692 units,
recording a growth of 21.29% compared to the same period last year. During the corresponding
period last Financial Year, the company had recorded sales of 6,86,494 units in the first quarter
ending June 2005.
In June 2006, the company sold 2,78,660 units registering an impressive growth of 23.26% as
against 2,26,073 units in June last year.
During the month, Hero Honda launched Glamour FI - India's first Fuel Injection motorcycle.
The new technology eliminates the need for a carburetor, offers the most comfortable drive and
the lowest emissions, in addition to a host of other features, which is now available for the first
time to Indian two-wheeler riders.
CORPORATE SALES
Advantages of Corporate Sales at Hero:
Single window processing for delivery at multiple locations
No running around for documentation
Attractive finance options
Hero MotoCorp Passport - Unique CRM Program
Bulk Incentive Schemes
GREEN MANUFACTURING
Sustainable development lies at the core of Hero MotoCorp's vision of being one of India's most
environment friendly companies.
Hero MotoCorp believes that to create a sustainable enterprise, it is critical to strike the right
balance between business, mankind and nature.
CLEANER PROCESSES
Every raw material and chemical is thoroughly evaluated for its environmental impact before it is
introduced into our production process.
Over the last few years, Hero MotoCorp has proactively eliminated the use of harmful
substance like
Asbestos
Hexavalent Chromium
Phenolic Substances
EVENTS & NEWS
Global Conditions
With better-than-expected economy numbers coming in from US and China, it now seems likely
that the world will not slip into a double dip recession. However, global growth path in the short
to medium term is likely to be anemic.
There is no doubt today that even two years after it erupted, the world is still grappling with the
aftershocks of the global financial earthquake that hit in 2008. The crisis that unfolded around
the world since then has challenged many of our ideas; it has also reopened questions that we
thought have been settled.
For example, before the crisis erupted in 2007, many of us believed that emerging countries had
de-coupled from advanced countries. That hasn't quite happen. All emerging market economies,
including India, have been affected by the crisis in different ways.
But having said that, it also appears to be that in a developing market economy like India it is
possible to plan a slightly different path for two reasons. First, the pulse of the economy is
essentially domestic. This makes it possible to create virtuous circles of demand and supply
continuously. Second, as growth spreads into the hinterland, completely new pockets of demand
- young workers, workers in rural India, women workers--are emerging, and they supplement
and strengthen the existing virtuous circles.
So what we are seeing is some "soft or gradual decoupling" at work. In fact, this phenomenon
appears to be gaining momentum as we move forward.
Growth Momentum Builds
The Indian economy grew at over 7 per cent during 2009-10. For two successive quarters from
January 2010 to June 2010, GDP growth has been in excess of 8.5 per cent. The performance of
the Indian economy has been especially remarkable, considering that the country suffered from
its worst agricultural drought in several decades.
India’s Industrial Sector
where growth bottomed out during the early part of the year in review, began staging a recovery
after June 2009. This process gained momentum from October 2009-and at the time of writing,
the industry continues to grow robustly in double digits.
Restocking by manufacturers, following the earlier cutbacks in factory output & drawdown of
inventories have clearly had a positive impact on growth. More important, industrial recovery is
becoming broad-based, with as many as 14 out of 17 major manufacturing sectors clocking
positive growth during Jan-Dec 2009. This holds out prospects of even faster recovery in the
months to come.
Besides, the industrial sector continues to get strong support from the services sector, which
makes up close to 57 per cent of the country's GDP.
Prospects for the current year are promising. With a normal monsoon playing out in 2010,
agricultural growth is likely to rebound strongly from last year's decline; in turn, this will
enhance rural consumption and tame inflation. As demand picks up, companies will be forced to
create fresh capacities. Evidence of this is already at hand, with capital goods production in July
notching a whopping growth of 63 per cent.
The growth projections are robust for the long term as well, and CII estimates that at current
rates of growth, India will become a 2 trillion dollar economy by 2016.
Infrastructural Impetus
There are good tidings emerging from the infrastructure sector-long considered the stump of the
economy. Gross Capital Formation in Infrastructure as a percentage of GDP has almost doubled
since 2002. It is expected to be 9% of GDP till 2012.
Equally significant, it now seems that the public private partnership (PPP) model is gaining
traction. During the Tenth Plan (2002-2007), about 25 per cent of the total investment in
infrastructure in India came from the private sector. Private investment in infrastructure is
expected to be around 36% during the Eleventh Plan (2007-12).
Challenges Remain
Of course, despite the strong underpinnings of growth, there are challenges that have to be met.
There were some concerns, particularly on the inflation front. Food inflation remains a major
source of concern, and with stronger recovery, it is spreading to the manufacturing sector.
At another level, India's physical and social infrastructure is still grossly inadequate. Inadequate
progress in these areas will quite clearly affect the sustainability of the country's growth story in
the coming months and years.
India as attractive Market
Still, in terms of potential, few countries can match India today.
The growth of India's middle class purchasing power - World Bank data shows that India's per
capita GDP adjusted in PPP terms doubled in the ten year period between 1998 to 2008-is
creating consumptive capacities never seen in the country before.
Industry Environment
It was a year of strong recovery for the two wheeler industry. After growing tepidly at 5 percent,
in 2008-09 the two wheeler industry was back on track in 2009-10. Sales grew by 24 per cent
and crossed 10 million units for the first time ever. Today, it is heartening to see that two
wheelers make up around three fourth of the total vehicle production in the country.
Some of the strong growth during the year in review, has perhaps come due to the government's
fiscal stimulus package -especially excise cuts that were in force through most of 2009-10.
However, as the financial year ended, it became apparent that the growth momentum could be
sustained even after excise duties were re-balanced during the Union Budget in February 2010.
Lower interest rates also contributed to higher two wheeler sales during the year in review. Yet
at the time of writing, even with rates hardening slightly, the two wheeler industry continues to
grow comfortably in double digits.
This is a clear indication of the kind of growth impulses that exist.
Consider, for example, the level of consumer confidence. As per the AC Nielsen Consumer
Confidence Survey released in July 2010, consumer confidence was highest in India, ahead of
other promising emerging economies like Vietnam and Indonesia. Indians emerged the most
optimistic globally on all parameters, whether it was with regard to their job prospects, personal
finances or attitude towards spending.
Meanwhile, inside India's vast hinterland, there is growing evidence of potential getting
converted to demand, thanks to better distribution.
Rising two wheeler demand is also an indication that government schemes at the lower end of
the socio-economic pyramid have started having some impact.
Company Performance
During 2009-10, as the economic environment in India improved, your company strengthened
and consolidated its hold over the two wheeler market.
Strong support for flagship brands, and strategically timed new launches and variant launches
ensured continued dominance in the crucial commuter segment of the two wheeler market.
A series of cost rationalization measures helped your company maintain strong growth in
profitability, despite the fact that material costs rose sharply.
Despite the extremely competitive business environment, Hero Honda was able to turn in its
best-ever performance during the year in review.
Even with a high base of 3.72 million units in the previous year, your company notched a
remarkable growth of 23.6 per cent and ended the year with sales of 4.6 million. Today, your
company continues to be the overwhelming leader both in the domestic two wheeler industry and
motorcycle segment.
In value terms, total sales increased by 27.9 per cent to Rs.15,758 crores. The Company's
earnings before interest depreciation and taxes (EBITDA) margins increased to a record 17.45
per cent. Operating profit (PBT before other income) increased by 64.16 per cent.
The surge in profitability came from better sales realisations, cost rationlisation and optimisation
measures. These included better control over material cost, marketing cost and overheads,
besides a sharp focus on operational efficiencies.
The robust performance of the two wheeler industry has increased both the stakes and the
competitive pitch in the market. Two wheeler manufacturers have increased capacities. They
have become more aggressive and are rolling out products faster.
But this has not unfazed your company. I remain confident about your company's future. As I
have always done so in the past, I'd rather see the challenges as opportunities to learn, create and
grow.